Almost 90% of intensive care units for sick and premature babies are consistently caring for more infants than is safe, according to a report.
The NHS is "stretched to breaking point", with almost 900 babies transferred between hospitals in the last year due to a shortage of staff.
The study, from the Bliss baby charity, also found that clinical leaders in neonatal units are being kept out of funding discussions by higher levels of management.
More than half of neonatal units said their clinical leaders were not included in discussions about activity levels and funding for their neonatal service.
"This means that plans put in place by commissioners and trusts vastly underestimate the demand for care at many units," the report said.
"Coupled with staffing shortages, this is putting units under huge pressure."
Overall, 86% of neonatal intensive care units (NICUs) were found to be consistently caring for many more babies than is considered safe.
In special care baby units, 33% were not meeting safe staffing levels, while the figure was 63% in local neonatal units.
The report added: "Some 855 babies were transferred between hospitals last year due to a shortage of staffed cots rather than medical need, putting babies at risk and adding to their families' stress and worry."
Some 64% of neonatal units (52 out of 81) did not have enough nurses to meet national standards on safe staffing levels, while two-thirds of units did not have enough specialist nurses.
Experts behind the report said 2,140 more nurses are needed to care for premature and sick babies.
The report said: "Our findings reveal a system in trouble, with a significant shortage of nurses, doctors and other professionals that are needed to deliver safe and high-quality care to premature and sick babies.
"The dedicated, hard-working staff at neonatal units across the country are being stretched to breaking point - putting babies' safety and survival at risk and impacting their long-term development."
In its Toolkit for High Quality Neonatal Services published in 2009, the Department of Health said intensive care units should have a ratio of one nurse to one baby.
In special care, the ratio is one member of staff to four babies and the figure is one nurse to two babies in high dependency units.
Caroline Davey, chief executive of Bliss, said services were falling behind on critical measures of quality and safety six years after the Government report.
She added: "If serious investment is not made, services will be facing a crisis in years to come. It needs to be addressed as a matter of urgency, so that every baby has the best possible chance of survival and of having a full and healthy life."
Professor Neena Modi, president of the Royal College of Paediatrics and Child Health (RCPCH), said: "Today's report describes a service that is overstretched and inadequately funded.
"The Bliss report makes for grim reading and echoes much of what the RCPCH found in our own workforce survey published just three months ago - there is an unacceptable shortage of healthcare professionals to care for sick babies and support their families.
"When the care of babies is compromised, so too are their chances of lifelong heath."
Professor Edward Baker, deputy chief inspector of hospitals at the Care Quality Commission, said the quality of neonatal care was part of a current review.
He added: "We welcome this report from Bliss. It is right to highlight the problems that staffing can have on the quality of neonatal care, and this echoes what we found on some of our inspections. Where we have found concerns we have told trusts to make improvements.
"We expect trusts to look at staffing in a sophisticated way focused on the quality of care, patient safety and efficiency, rather than just crude numbers and ratios of one group of staff."